State Auditor Nicole Galloway deserves a tip of the cap for saying what Missouri’s legislative leaders won’t: They have put the state’s finances on a narrower and less steady foundation.
The state’s budget “is not adequately prepared for an economic downtown,” she writes in a recent report.
Tax cuts have led to “an eroding tax base” that, coupled with rising spending, has led to legislators with less to allocate for education and transportation – and it’s hard to name two more pressing issues for the state. That is shifting the burden more and more to local taxpayers.
Galloway’s analysis is that income tax cuts passed by the General Assembly will add to economic growth but not enough to pay for themselves. She’s previously pointed out that legislators have passed tax cuts on the growth-will-come theory but have never followed through with studies to see if that happened.
Missouri is indexed to the federal tax system, and the new federal tax cut will reduce state revenues too. This also makes Missouri more dependent on sales taxes, which she points out have declined by an average of 0.11 percent a year over the last 15 years. They peaked in 2007, fell sharply in the Great Recession and are still slowly climbing back to pre-recession levels.
“Cuts to income tax rates already in law will not provide enough economic activity to overcome the significant revenue decreases expected, leaving the state (when the next downturn comes) with no option but to cut services, and reduce funding to areas that have already seen their funding reduced since the recession, such as elementary and secondary education and higher education,” she writes.
She’s also criticized the state for having too little contingency funding and for doing too little to monitor its tax credit liabilities, further reducing legislators' fiscal latitude when the budget tightens.
She also suggests – and it’s a fair point – that Missouri just isn’t performing that well.
“Missouri has historically been a low-tax state,” she writes. “Despite the low tax rate and a long-standing reputation for being business friendly, the state has also historically been a slow-growth state.”
Taco John’s says it hopes to open in the old Krispy Kreme on Noland Road in mid-May but cautions that schedules often change. Across the street in the old Quiznos site, there’s still a new sign for Lutfi’s Fried Fish but little evidence of any other activity. … “Millennial Employees: How to Hire Them and Work with Them” is the subject of a Blue Springs Chamber of Commerce Power Hour. It’s from 8:30 a.m. to 9:30 a.m. next Tuesday at the chamber office, 1000 W. Main St. in downtown Blue Springs. It’s free, but register at bluespringschamber.com. … It’s widely reported that Toys ‘R’ Us, a victim of changing times and a private buyout gone bad, will close all of its remaining stores. Those include one in the struggling strip center at Noland Road and U.S. 40 in Independence. An announcement could come as soon as today.
-- Jeff Fox is The Examiner’s business editor and reporter. Reach him at 816-350-6313 or firstname.lastname@example.org. Follow him on Twitter @FoxEJC.